Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether a business improvement board established by a municipality is a Canadian municipality and therefore falls within the definition of a "qualified donee" in subsection
149.1(1).
Position:
No, based on the facts provided.
Reasons:
Since there is no definition of "municipality" in the Act, we should refer to the ordinary dictionary meaning of the term. Given the strictly limited powers of the business improvement board in this case, it is our view that the board is not a municipality for the purposes of the Act.
Xxxxxxxxxx 992145
Attention: xxxxxxxxxx
August 27, 1999
Dear Sirs:
Re: XXXXXXXXXX Business Improvement Area
This is in reply to your facsimile letter dated June 7, 1999 which was forwarded to us for reply by the Charities Division. You have requested our views as to whether the XXXXXXXXXX Business Improvement Area (the "BIA") is a Canadian municipality for the purposes of paragraph 11O.1(1)(a) and paragraph (d) of the definition of "total charitable gifts" in subsection 118.1(1) of the Income Tax Act (the "Act") and therefore falls within the definition of a "qualified donee" in subsection 149.1(1) of the Act.
It is our understanding that the BIA board of management is a body corporate established under the Ontario Municipal Act (the "OMA"). Its purpose relates to the improvement, beautification and maintenance of municipally owned land, buildings and structures in a designated area, beyond such improvement, beautification and maintenance as is provided at the expense of the municipality at large, and the promotion of the area as a business or shopping area. Under the OMA, the BIA obtains it funding from the municipality. Specifically, the BIA submits estimates to the municipality for the current year's expenses and may make requisitions for all money required to carry out its powers and duties. The municipality levies a special charge on properties within the designated area sufficient to provide funding to the BIA to carry out its purpose. The BIA may not expend monies without council approval of the submitted estimates and the BIA may not borrow money and may not incur any debt beyond the current year without council approval. The BIA, however, has the power under the OMA to impose user fees.
Since there is no definition of "municipality" in the Act, we should look to its ordinary dictionary meaning which is a community having and exercising the powers of self-government and providing the type of services customarily provided by such a body.
Based on the information provided,the scope of BIA's activities is strictly limited. It does not regulate the conduct of local citizens or supply their needs, except on a strictly limited basis. Moreover, it appears that the BIA is directly administered by the municipality. Accordingly, it is our view that the BIA is not a municipality within the meaning of the Act.
We note that if the BIA can be considered an agent of the municipality, a payment to the municipality's agent would usually be considered as the equivalent of a gift to the municipality directly. It is our understanding that there is no provision in OMA which expressly declares that the BIA is an agent of the municipality. As indicated in ATR-63, in cases where the statutory language of the legislation under which the entity was established is unclear as to whether or not the entity is an agent of the Crown, determination of the entity's status is a question of fact to be resolved on the basis of common law principles of agency law.
While we hope the foregoing comments are useful, they are given accordance with the practice referred to in paragraph 22 of Information Circular 70-6R3 dated December 30, 1996 and are not binding on the Department in respect of any particular situation.
Yours truly,
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
cc Neil Barclay Director, Charities Division
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